History of Power of Amendment

The original Trust Deed provided a Power of Amendment in Regulation 28 which provided the amending power to the Directors of the sponsoring Employer – Elder Smith & Co Limited.

The Elder Smith & Co Limited Provident Funds Act 1963 (SA) amended the terms of this trust so the the Directors of any “successor company” would assume the responsibilities of the Directors of Elder Smith & Co Limited.

It is important to note that the Power of Amendment was not provided to “the company“, since is a separate “legal person“.

Regulation 28 was renumbered to Regulation 50 in the consolidation Deed of Variation dated 6 May 1958.

The Power of Amendment prescribes that a Deed must be used as the instrument to vary the terms of the original Trust Deed as well as the terms of the consolidation Deed of Variation dated 6 May 1958.

Another condition imposed by Regulation 50 is that a majority of the Trustees must give their consent in writing to any proposed amendments to the terms of the occupational pension trust.

The original Trust Deed did not include a separate set of “management rules” which could be subject to amendment by an instrument in writing. All the provisions of the original Trust Deed could only be amended by another Deed, which is also the common law requirement for the amendment of a Deed. This same aplies to the consolidation Deed of Variation dated 6 May 1958.

Legal Principals

In The Laws of Australia {Thompson Reuters) at [15.14.1450] under the section “It is the trustee’s plainest duty to obey the terms of the trust” the following is stated:

“Where the trust instrument confers a power of amendment, the conditions and restrictions imposed on its exercise must themselves be strictly observed.”

At [25.20] under Power of variation in the trust instrument, in Equity and Trusts in Australia (4th Edition) , GE Dal Pont and DRC Chalmers state:

“There are further general law restrictions on the scope of an even apparent unfettered power to vary, Firstly, a power to vary will not permit a variation removing a restriction of that power, secondly, its exercise cannot affect any vesting that has already taken place…..Thirdly, a power to vary a trust deed arguably does not extend to a variation that would alter the substratum of the trust {Lock v Westpac Banking Corp (1991) 25 NSWLR 593 at 602}

Geraint Thomas in Thomas on Powers {1st Edition} states in Chapter 14 – Power of Amendment at {14-13]:

“Where the power of amendment is subject to express restrictions, those restrictions must be complied with and cannot themselves be amended, removed or annulled by means of an exercise of the power.”

This legal principle has been upheld many times by the Courts. Several of these cases are covered in more detail here.

Purported Powers of Amendment

Purported Rule 1.9.1

A document described on its face as a “Resolution” and dated 20 December 1982 , recites the original Trust Deed, but does not recite the consolidation Deed of Variation and does not recite Regulation 50 as the Power of Amendment.

Instead this document recites a purported “Rule 1.9.1” as the purported Power of Amendment. This Rule appears to have been mistakenly quoted from another trust.

Rule 1.9.1 is as follows:

However there is no executed Deed of Variation that purports to replace Regulation 50 with purported Rule 1.9.1, and even if such a purported Deed of Variation existed, Rule 1.9.1 would still be void and ineffective as a replacement for the Power of Amendment provided in the original Trust deed.

The purported “Resolution” dated 20 December 1982 itself does not even comply with purported “Rule 1.9.1” since it has been executed by the legal person – “the company” and not by the “Board of Directors“.

This “Resolution” is entirely void and ineffective, yet is was used as justification for replacing five natural person Trustees resident in South Australia with a sole purported corporate Trustee resident in Victoria.

Purported Rule 1.13.1

The purported “Deed” dated 26 August 1986 recites no Power of Amendment, however attached to this purported Deed of Variation signed by the well know white-collar criminal Ken Jarrett is a set of purported “Rules“.

The original Trust Deed did not provide for a separate set “management rules” that could be amended by an instrument under hand.

Included in the purported Rules attached to the “Jarrett Deed” is purported Rule 1.13.1, which appears to be derived from purported Rule 1.9.1. However the purported amending power is now provided to the “Trustee” instead of the “Trustees” and the consent of the natural person Directors is no longer required. The purported consent of the Directors has been replaced by the purported consent of the legal person – the Principal Employer.

The “Jarrett Deed” purports to introduce another version of a purported Power of Amendment in the attached purported “Rules“. However the Jarrett Deed is void and ineffective for several reasons as covered in more detail here.

Purported Rule 1.13.1 is therefore also void and ineffective. However all subsequent instruments dated after 26 August 1986, recite purported Rule 1.13.1 as the purported Power of Amendment, instead of Regulation 50.

Therefore all subsequent purported amending instruments are void and ineffective.

It is important to note that the legacy funds of Goldsbrough Mort & Co Limited that were closed to new members in 1963 had different Powers of Amendment to The Provident Fund.

The “Officers’ Provident Fund” had a dualPower of Amendment, while the “Supplementary Pension Fund” had a jointPower of Amendment.”